It is not sufficient to have a promising business idea. There are many hurdles to overcome before the actual work begins. In the days of Henry Ford it worked out well, as soon as you mastered the entire value chain. Meanwhile, the pendulum is swinging in the opposite direction. Today, the one-hundred percent vertical integration is being replaced by a very low percentage – at the SMART plant in Hambach, France, it amounts to ten percent. Digitization will lead to even flatter vertical integration. These become possible, when the many tasks are spread across many shoulders. Platforms provide such shoulders.
It does not matter, whether we are talking about different platforms or one that contains all the necessary functions. With the following offers tomorrow’s entrepreneurs can focus on their actual business model.
The fourth industrial revolution, Industry 4.0, is driven by the opportunities of network-based ICT – cyber-physical systems, big data, cloud services, 3D manufacturing, embedded technologies, etc. The use of these offerings cannot be avoided. However, you do not have to take care of all aspects anymore. These tasks have been taken over by platforms that provide these services in a user-friendly way.
The term was created in the field of IT. The operating system combines different components into a functioning whole. Under the slogan XaaS (Everything as a Service), today platforms are being provided in an application-oriented way – from infrastructure, to production facilities, to special applications that are used when required and paid only then.
Area of Expertise
In 10 main occupational groups you will find the different professions, each responsible for specific areas. The specialization of the individual areas provides today a vast amount of practical experiences that can be used without the need that one has to familiarize oneself with the respective area. The fourth revolution will lead to more and more platforms, where experts offer their deliverables as a service.
The current networks are websites where producers and consumers meet on a platform provided by a broker in order to offer a certain service – UBER, AIRBnB, Paypal, Ebay etc. In the future, exclusive biztopes will emerge, where selected participants support each other in their business. The Henry Ford of today shares his means of production on a platform with his competitors and stands out in speed, good ideas and versatility.
The place to trade has always been determined by the goods and services that have been exchanged, as well as by geographical features. An overlap of markets rarely took place. Today’s markets are just a click away from every user. Therefore on the one hand one is quickly at the point of action, but on the other hand one is also exposed to all offers. The benefits of the classic marketplace, with its reference points and regulations, are already being exploited by platforms where sellers and buyers meet at auctions – eg. Covisint, SupplyOn.
The little sister of a market is the niche that forms in the corners, where big markets do not expect much revenue. Through the Internet, this niche is as reachable as the big market. Depending on the success of the niche, it can quickly develop into a market and cover with its platform more and more areas.
Business model In a modular world, the actual business models use pods (i.e. small, autonomous units that develop value-add) that are needs-oriented created and eventually resolved when they fulfilled their purpose. The required resources are drawn from the various platforms (see above) on an expenditures basis (pay-per-use). The costs are created by integrating the technology, the operating system, the area of expertise, the network, the market and one’s own niche. If the results are correct, then over time the users will optimize the interaction with the platforms.
Bottom line: The start of a new business model no longer requires the immense preparation by building the necessary technology, a coherent operating system, the experience of a specialist area, the lengthy development of a network, the development of a market or its own niche. Platforms allow start-ups or new businesses to focus on designing their core competencies. Platforms make businesses more agile.
Increasing volatility, uncertainty, complexity and ambiguity (VUCA) can no longer be mastered with the rigid structures of the past. Collaboration takes place across borders, wherever you look. The related structures are constantly changing and subsist on self-organizing actors who build, use and eventually resolve the necessary relationships. The result is a more or less dense network. Aside from today’s needs, where everything is just one click away, there are some arguments in favor of and against the use of networks.
The following ProCons affect not only networks but all types of communities.
The benefits cover more than just the economic interests of the companies.
Competence advantages The network draws its strength from the purposeful connection of resources and capabilities. The participants‘ intrinsic motivation provides the network with a long-term advantage ahead of other forms, which on the one hand require a lot of setup time and on the other hand never have comparable access to this amount of competencies.
Information advantages The actors provide a lot of information. This includes experience and knowledge about different markets, customers, products, technologies and, above all, business processes. By sharing this information (push vs. pull), they reach all network participants at a relatively high speed.
The actors already provide a variety of resources – material and immaterial goods and especially people. Contrary to other forms of organization, the network offers an adjustable openness that makes it possible to expand resources faster. Just the use of these resources of the actors provide means that otherwise would have to be procured with much effort. In addition, this tool is usually better suited that is brought by the craftsman.
Social advantages Getting to know like-minded people is a huge advantage for the actors. The sense of community offers an environment in which you can expect more pleasant working conditions and a trustworthy cooperation due to the same interests.
Economic advantages Looking at the entire network, there are many savings for the company. Cost advantages arise when the actors already bring additionally to their commitment many resources that do not need to be purchased. The combined competence accelerates the business and reduces the risks. Practicing self-organization in a network avoids delays caused by a hierarchical structure with its long decision-making and communication paths.
Against networks speak especially apparent extra efforts, unpredictability and the difficult control.
Even with all the advantages, networking requires active involvement of its members. The open procedures and the lack of centralized control require other efforts of the participants, which are perceived at first glance as additional expenses. However, much higher overall savings can be made for the company.
Even with a lot of engagement in disseminating information, there can be more double work in the self-organized network than in a tayloristic organization. The lack of control can lead to a competition for the best idea that would be wasteful.
Increased communication effort The multiplicity of actors increases the coordination effort, which can even not be avoided with agile approaches. New insights and experiences simply have to be shared, absorbed and processed. This effort is the price for a lot of advantages.
Cooperation issues Of course, because of the variety of characters, there will not only be sympathy, but also antipathies that can burden collaboration and trust and eventually lead to an increased need for mediation. This makes team building an important exercise.
Lack of control A strong driver for the formation of a network is the intrinsic appeal for each participant. Leadership could quickly disturb. At the same time, a network also needs a direction. Without centralized control, the network might take longer to reach an agreement.
Information loss The open structure of a network and the frequent participation of individual members in different networks automatically lead to the leakage of information. Lack of secrecy could endanger the network.
Bottom line: Although many aspects speak against creation and participation in a network, you have to face the fact that a VUCA world creates new conditions that function in a way that cannot be covered by traditional approaches. The competence, information, resource social, and economic advantages are arguments for the use of networks. At the same time, appropriate measures have to minimize the risks.